A Problem With Increased Surveillance

Any punishment designed for deterrence is based on the following calculation. The potential criminal weighs the benefit of the crime against the cost, where the cost is equal to the probability of being caught multiplied by the punishment if caught.

Taking surveillance technology as given, the punishment is set in order to calibrate the right-hand-side of that comparison. Optimally, the expected punishment equals the marginal social cost of the crime so that crimes whose marginal social cost outweighs the marginal benefit are deterred.

When technology allows improved surveillance, the law does not adjust automatically to keep the right-hand side constant. Indeed there is a ratchet effect in criminal law: penalties never go down.

So we naturally hate increased surveillance, even those of us who would welcome it in a first-best world where punishments adjust along with technology.

1 comment

“Never” is extreme, but I think the point is that penalties don’t decrease *as* the likelihood of getting caught increases. In other words, legislators aren’t actively monitoring the chances of being caught committing a crime and adjusting the penalties accordingly.

I was wondering about this the other day in the context of red light cameras. I think this theory makes sense, and explains why people dislike them so much. There was an implicit social contract around speeding – as long as you didn’t speed too much, too often, the odds of getting caught were low. Suddenly the chances of being caught increased dramatically in areas that adopted red light cameras. Yet the fines remain the same, and voters see the cameras for what they are – revenue generators.

I did find myself wondering too, what are the implications for insurance rates? Have insurers been lowering rates for those with speeding tickets? I would think that in areas with red light/speed cameras, the increase in insurance premiums for a given ticket should be less than in areas where there aren’t cameras.